SACE | Southern Alliance for Clean Energy

Energy Department Puts Taxpayers on the Hook While Keeping Them in the Dark Over Risks of Multi-Billion Nuclear Loan Guarantees for Vogtle Reactors

by Jennifer Rennicks

February 19, 2014

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Agency partially finalizes deal but fails to disclose details of risky loan to Southern Company’s Georgia Power and partner utility Oglethorpe Power for new reactors in Georgia; MEAG’s multi-billion dollar deal still months from finalization

Atlanta, Ga. (February 19, 2014) ///PRESS RELEASE/// Secretary of Energy Moniz announced today that the Department of Energy (DOE) has finalized terms of $6.5 billion worth of taxpayer-backed federal loan guarantees that were offered as part of an $8 billion package over four years ago by the Obama Administration to utility giant Southern Company and one of its partners, Oglethorpe Power, to build new nuclear reactors at Plant Vogtle in Georgia. Yet the details of the risky deals remain shrouded in secrecy with taxpayers having had no opportunity to glean whether their interests are being protected. A third partner in the project, MEAG, has yet to have their $1.8 billion loan guarantee finalized, in part because a complicated license amendment needed for the guarantee has not yet been approved by U.S. Nuclear Regulatory Commission (NRC).

In response to Moniz’s announcement today, the Southern Alliance for Clean Energy (SACE) has filed a Freedom of Information Act (FOIA) request with the agency demanding that the terms and conditions of the loans be made public immediately. The organization also calls upon Congress to conduct an investigation of this loan guarantee process and the lack of transparency that surrounded it before DOE issues the final Vogtle guarantee to MEAG and before it issues any other loan guarantees to additional projects.

“How can the Department of Energy celebrate what could be a disaster for taxpayers? How the agency can finalize a large portion of this deal without providing the full details and terms of the loan offers to American taxpayers before they’re on the hook is beyond unacceptable,” said Sara Barczak, high risk energy choices program director with the Southern Alliance for Clean Energy. “This is corporate welfare for one of the largest power companies in the country, Southern Company. And apparently this is what it takes to build new nuclear reactors – secrecy, big taxpayer handouts and a skewed playing field that prevents the free market from determining what is the best energy option to meet a region’s needs.”

Operating in an open, transparent manner with the public has not been a component of the loan guarantee process. Since March 2010, SACE has filed nine FOIA requests with the DOE, Office of Management and Budget (OMB), and Department of Treasury to unearth important details on the risks posed to U.S. taxpayers if the more-than $15 billion nuclear project should default — a reality that plays a large role in the nuclear industry’s history. Each request was met with delayed response, and when documents were finally released they were heavily redacted, as recently observed in documents SACE received from DOE. SACE went to court twice to force DOE to disclose the information requested, and in light of this litigation finally received documents revealing some of the loan guarantee terms. But, as recently as February 3, 2014, DOE refused to release to SACE certain final loan terms. SACE’s September 2013 FOIA request to OMB regarding these same terms remains unanswered.

“It is difficult to understand why DOE and OMB continuously failed to be transparent in their decision making. Despite repeated requests from SACE, the agencies refused to timely disclose to the public the full terms and conditions of the deal,” said Mindy Goldstein, Director of the Turner Environmental Law Clinic at Emory University’s School of Law, who filed today’s tenth FOIA request on behalf of SACE. “This practice of secrecy is inappropriate, and we call on Congress to investigate the loan guarantee process and demand the agency make any further loan guarantee decisions in full view of the public.”

SACE’s FOIA requests have often focused on the credit subsidy fee, which represents the “price tag” a utility must pay to the federal government for the loan guarantee, and is calculated based on the borrower’s risk of default. In previously released documents that SACE acquired due to successful FOIA litigation, the initial fee estimates appeared to be too low to protect taxpayers. Since issuing these estimates, there have been continuing changes to the loan terms, significant delays and cost overruns facing the Vogtle project, and an outstanding $900 million lawsuit between the utility and the lead contractor, Westinghouse. The deteriorating power market over the past few years and the ongoing Fukushima nuclear accident in Japan that is impacting the nuclear industry worldwide are also factors that were not present when the credit subsidy fee estimates were first calculated. In light of these events and many others, SACE hoped that the final credit subsidy fees would be increased to more accurately reflect the riskiness of the investment. But, there is no indication that DOE has adjusted the credit subsidy fees to reflect these new realities. At this time, however, the exact amount of the final credit subsidy fees remains unknown. In the last two documents SACE received from DOE this January, any mention of the final credit subsidy fees and related costs was wholly redacted.

There has been significant public interest in and opposition to the controversial loan guarantee program. In May 2011, over 180 organizations and businesses urged Congressional appropriators to end the nuclear loan guarantee program. In 2012, over 17,000 petitions were sent to then-Energy Secretary Steven Chu opposing the Vogtle loan. Last November, Nuclear Information and Resource Service (NIRS) attempted to hand deliver nearly 23,000 petitions to DOE, but were informed the agency’s security process for mail and deliveries would not permit receipt. And just last month, a group letter was sent to Secretary Moniz urging DOE to cease pursuit of finalizing the Vogtle loan guarantee offers.

Last month, the DOE extended the deadline for the seventh time, to the end of February 2014 for Georgia Power and Oglethorpe Power with a separate deadline for MEAG until the end of July as it undergoes apparent last-minute corporate structural changes. The loan guarantee offer was originally made in February 2010 and the initial acceptance deadline was in May 2012.

For additional background, please view a report analyzing some of the loan guarantee documents SACE received from previous FOIA litigation here and the supplemental memo. Unlike DOE and OMB, the Southern Alliance for Clean Energy has made thousands of pages of documents received publicly available through an online library. For a summary of the Vogtle loan guarantee, view this factsheet from Taxpayers for Common Sense and summary of risks with the loan guarantee program.

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Founded in 1985, the Southern Alliance for Clean Energy is a nonprofit organization that promotes responsible energy choices that create global warming solutions and ensure clean, safe, and healthy communities throughout the Southeast. Learn more at www.cleanenergy.org

"Energy Department Puts Taxpayers on the Hook While Keeping Them in the Dark Over Risks of Multi-Billion Nuclear Loan Guarantees for Vogtle Reactors"
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